Fighting a data grab, Airbnb attacks “vague” New York hotel laws

But Airbnb CEO admits some larger hosts should pay occupancy tax.

Earlier this week the home-renting company Airbnb publicly objected to what it saw as an overreaching subpoena by the New York Attorney General. The subpoena demanded data on all 15,000 of its hosts.

Airbnb lawyers have now filed their objections in court. Airbnb's petition, filed yesterday in Supreme Court in Albany, is more ambitious than the company let on earlier. It isn't merely trying to quash the AG's request for data on its users. Rather, a good portion of the 24-page petition is dedicated to directly attacking New York's hotel tax as unconstitutionally vague.

Objecting to a big burden

The subpoena is "precisely the type of 'fishing expedition' that is not permitted by the courts," begin Airbnb lawyers. The attorney general has no evidence of wrongdoing by any Airbnb user and "has, in fact, done nothing at all, other than attempt to use Airbnb as an arm of its investigatory staff."

That's especially misguided since the subpoena is looking for personal information of users, Airbnb argues. The AG is asking for an Excel spreadsheet identifying every host by name, address, and Airbnb profile. It also seeks data on every guest stay, its duration, and the rates charged, as well as gross revenue generated by each host.

Creating such a spreadsheet would require Airbnb to "extract hundreds of thousands of separate records spanning millions of cells," the company notes in its objection. "Preparing this data would take a significant amount of dedicated employee time across multiple company departments within Airbnb." It would have to manually sift through "hundreds of thousands of automated communications," a task that would take "weeks of dedicated manual review time from attorneys, paralegals, temporary workers, and multiple company departments."

... And a "vague" law

The new Airbnb legal brief also attacks the hotel tax directly, calling it "unconstitutionally vague." The occupancy tax that the AG says hosts should be paying is all over the map, riddled with exceptions and differing definitions, argue Airbnb lawyers.

The definition of a "hotel" in one tax document is defined as "a building or portion of it which is regularly used and kept open as such for the lodging of guests." Airbnb hosts are renting their own homes and don't provide room service or laundry service, for instance. (They do, however, have the option to perform cleaning services between rentals and charge for it, a fact that's omitted in this brief.)

There's an exception for "summer homes, camps, beach houses, and similar properties," as well as a "bungalow exception," all of which can allow occasional renters to avoid paying hotel taxes. And finally, Airbnb points out city rules say an accommodation "will be irrebuttably presumed not to be regularly used and kept open for the lodging of guests if... during any 12-month tax period... rooms, apartments, or living units are rented to guests or occupants on fewer than three occasions or for not more than 14 days in the aggregate."

The maze of rules leaves no clear answers for Airbnb hosts, its lawyers note:

[H]ow is an Airbnb Host supposed to know whether their home is 'regularly used and kept open' for the lodging of Guests? Does an Airbnb Host who rents their townhouse once for 15 days have to pay a tax? Is there no tax if an Airbnb Host rents out their second, or 'beach' home, for three weeks? What exactly does the bungalow exception mean in the context of Airbnb?

These are all good questions, but unfortunately there have been no good answers for Airbnb or its users. Airbnb has no guidance from the relevant tax authorities or the NYAG as to when and how these taxes or exemptions apply to it and its users.

Airbnb has publicly stated it doesn't mind having some of its users pay the occupancy tax. Just last week, Airbnb CEO Brian Chesky reiterated that position in a blog post. However, the company wants to create a "streamlined" system for paying that tax, working with New York lawmakers. What the company very much doesn't want is to have the standards set by an enforcement action by the state Attorney General.